Answers to Everyday Questions : What is market value ?

A market value is the expected price of a real property. Generally, the market value of a piece of land, home or other properties is determine by real estate professionals or appraisers based on several factors. However, since the market can be very unpredictable since it tends to fluctuate dramatically, a real estate value may not be so reliable. As such, the actual market value is determined by fair and open negotiations from both the seller and buyer.

Determining the market value of a property is very important if you’re selling a home since it allows you to set an objective asking price. Some sellers that have no idea of a property’s market value tend to price a land or home too low or too high, which could both result in a negative financial result. In the same sense, many homeowners without market value knowledge can become victims of a practice called “predatory lending” wherein lenders talk you into borrowing more money than the land is truly worth.

An appraiser or any professional working in the real estate industry determines the market value by comparing other properties, which have been sold recently within your area. This practice is called “comparables” as real estate professionals locate properties similar in style, size, zone and other features similar to your own, which have been sold in the last year. Another important factor in determining market values is the ‘average price per square foot’ of homes within your area. Although checking on ‘comparables’ should not be the only basis for determining market values, this information would provide a reasonable base price.

One of the best ways of increasing market value is home improvement, such as upgrading bathrooms and kitchens, or completing cosmetic updates, such as new carpeting, painting, window treatments or light fixtures. Such improvements not only help homeowners to present their real estate better, but also increase the overall market value. Remember that a property’s condition largely affects the overall market value, so a home with an outdated mechanical systems and faulty structures would not command a high asking price.

Anyone could check the market value of their homes by calling real estate agents to give you an appraisal. Some offer free appraisals in hopes of making you as a client when you decide to sell the home. However, you can also do your own research by checking out the public real estate tax records to gather information of recently sold properties. But to ensure you attract high-paying buyers of your home when you do list it down for sale, it is best to get up to three professional opinions that would determine its market value.